How Richmond Homebuyers Can Overcome Bad Credit
When buying a Richmond home, bad credit can make the process feel like like a lost cause. But while bad credit can make it more difficult for Richmond homebuyers, it does not mean that it is impossible. That being said, Richmond homebuyers with bad credit will need to be ready to work.
For the Richmond buyers who have a less than stellar credit score, here are some ways you can get yourself into a new home.
Know Where You Stand
One of the first steps for Richmond homebuyers is to know where your score stands. You should do this well before you even step foot in a mortgage lender’s office.
The easiest way to get your hands on your credit score is by ordering a free copy from each of the three major credit bureaus (Equifax, Experian, and TransUnion). You are entitled to a free copy every year, so take advantage.
Credit scores range from 300 (awful) to 850 (perfect). If you are at 740 or higher, you are at the top end of the range. This means you are well positioned for the best interest rates and the most attractive loan terms. Credit scores ranging from 700 to 759 are considered “good.”
But if you fall below 700, lenders will start to question how risky of an investment you are.
Start Reading
Believe it or not, not many Richmond homebuyers actually take the time to go through their credit report. Taking the time to do so is a worthwhile exercise so you can make sure that everything in the report is accurate. It is common for potential Richmond homebuyers to find errors in the report that are hurting you.
In fact, according to a 2013 Federal Trade Commission survey, around one in four Americans finds errors on their credit reports.
With that in mind, go through your credit report with a fine-toothed comb, looking for any and all errors that are not your own. If you come across any, you will need to contact the organizations that provided the incorrect info in order to update it.
This exercise alone can help instantly boost your credit score.
But what about those mistakes that are your fault? If they were honest one-time mistakes on your end, try getting in touch with the organization to ask that they get removed from your record.
However, the only true solution for major credit mistakes is time. If you can make consistent payments by their due date, you will see your credit score rise over time. This is not an overnight fix, but it will happen of you are disciplined.
Bad Credit Costs Richmond Homebuyers
Richmond homebuyers with bad credit can secure a mortgage. But you should also be ready to have to pay for it.
Homebuyers with low credit scores are often required to pay higher interest rates. While you are able to purchase a home, understand that you will be paying more money in interest over time.
Dig Deep for a Bigger Down Payment
If you are a Richmond homebuyer with bad credit but plenty of cash in the bank, you can sweeten your mortgage application by offering to put more money down. In cases like this, some lenders might be willing to work with Richmond homebuyers in exchange for a bigger down payment.
The bottom line is that the more money you can put down when buying a Richmond home, the more you are able to minimize the lender’s risk.
While difficult, bad credit will not necessarily stop Richmond homebuyers from getting a mortgage. But if you do find yourself in a position of applying with a low credit score, be ready to pay more both in interest and with your down payment.